(Updates prices)
By Eric Onstad
LONDON, May 2 (Reuters) - Copper hit a one-week high on
Tuesday as speculators followed short-term bullish signals, but
later pulled back on weak factory activity in top metals
consumer China and uncertainty about U.S. interest rates.
Three-month copper on the London Metal Exchange
(LME) fell 0.9% to $8,520 a tonne by 1640 GMT after touching
$8,770.15 for its strongest level since April 25.
U.S. Comex copper futures dropped 1.8% to $3.86 a
lb.
Trading volume was thin, with the Shanghai Futures Exchange
shut for a national holiday.
LME copper last week touched its lowest level in nearly four
months before rebounding.
"The bounce from support was significant, so if you're
trading it you're looking to try to get back toward $9,000, but
the chances are that rally will fail," said Dan Smith, head of
research at Amalgamated Metal Trading.
"I'm bullish for the year, I think we'll be in a down draft
for the next couple of weeks. It's partly because of
seasonality, but also because of the ramp-up of copper
concentrate in some of the key places like Peru and DRC."
Also weighing on the market was data showing China's
manufacturing activity shrank unexpectedly in April, raising
pressure on policymakers seeking to boost an economy struggling
for post-COVID lift-off.
"We believe that the government will resume subsidies on
electric vehicles, which would benefit both the manufacturing
and services sectors. The government might also push
infrastructure construction faster," ING economists said in a
note.
The market was also nervous about whether the U.S. Federal
Reserve will indicate this week that it expects a pause in
interest rate hikes after a widely expected increase of 25 basis
points.
In other metals, LME zinc dropped 1.6% to $2,605 a
tonne, while aluminium added 0.2% to $2,361, nickel advanced 3.1% to $24,980, lead gained 0.6% to
$2,160.50 and tin climbed 1.4% to $26,075.
For the top stories in metals and other news, click or (Reporting by Eric Onstad in London
Additional reporting by Enrico Dela Cruz in Manila
Editing by Conor Humphries and Matthew Lewis)
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